BioScrip Sees Wider Loss, Misses Estimates - Analyst Blog

By: Zacks.com

Posted: 8/13/2013 8:55:00 AM

Referenced Stocks: BIOS;GNC;HLF;MCK

In the second quarter of 2013,
BioScrip Inc.
(
BIOS
) posted adjusted loss per share of 2 cents, flat year over year.
However, the result was worse than the Zacks Consensus Estimate
of earnings of 3 cents per share.

On a reported basis, BioScrip's net loss from continuing
operations of $8.3 million or 13 cents per share was wider than
the net loss of $4.3 million or 7 cents per share in the year-ago
quarter.

Total revenue rose 22.3% year over year to $190.7 million in the
second quarter, trailing well behind the Zacks Consensus Estimate
of $206 million. In the second quarter, solid revenue growth was
attributable to higher contributions from Infusion Services and
Home Health Services business.

The company recorded a robust hike of 40.7% in Infusion Services
revenues to $156.2 million on the back of organic volume growth
and accretive acquisitions. Revenues from the Home Health
Services segment rose 8.1% to $18.2 million, led by volume growth
from private duty nursing activity. Lastly, revenues from the PBM
Services segment were $16.3 million, down 42% from the prior-year
quarter. The decline was due to lower sales volume of discount
cards, loss of a client and decrease in funded PBM business.

While the cost of product revenues shot up 36.7% to $102.7
million, the cost of service revenues declined 17.1% to $23
million in the quarter. Gross profit during the quarter rose
22.6% to $65 million with 10 basis points (bps) expansion in
gross margin to 34.1%.

Selling, general and administrative (SG&A) expenses increased
27% to $56 million. The surging SG&A resulted in a 50 bps
drag in adjusted operating margin in the quarter to 2.8%.

Exiting the quarter, BioScrip had cash balance of $81.6 million
compared with $62.1 million at the end of 2012. The company's
long-term debt was $225.5 million compared with $226.4 million at
the end of 2012.

Outlook

For 2013, BioScrip continues to expect revenues of $830-$865
million, reflecting growth in the range of 25%-30%. The current
Zacks Consensus Estimate is pegged at $838 million.

Our Take

BioScrip reported a disappointing quarter missing the Zacks
Consensus Estimate on both fronts by a sizeable margin. Further,
losses worsened in the quarter. PBM business also continued to
decline.

On the bright side, another quarter of strong top-line growth,
with most of the upside from the Infusion business, was
encouraging. We also look forward to accretion from recent
acquisitions.